Trump’s Tough Talk on Trade Rattles Investors

White House decision to impose tariffs on steel and aluminum imports raises concern that a broader protectionist trade policy may be in the offing

.. Low interest rates have long been a justification for stocks’ lofty valuations, and investors say higher rates will make equities less attractive as borrowing costs and Treasury yields rise.

.. Despite the retreat, the Dow is still up 34% since its election day close in 2016.

.. He thinks the prospects of a trade war are very small and that when the market realizes that, stocks will bounce back again.

.. European officials raised the prospect that they would challenge the tariffs at the World Trade Organization and could impose their own tariffs. Canadian officials also said they would “take responsive measures” against the U.S.

.. “I believe these tariffs on their own will push inflation higher, and higher inflation is a threat to the valuations of more or less all financial assets today,”

Trump’s Chaos Theory for the Oval Office Is Taking Its Toll

For 13 months in the Oval Office, and in an unorthodox business career before that, Donald J. Trump has thrived on chaos, using it as an organizing principle and even a management tool.

Now the costs of that chaos are becoming starkly clear in the demoralized staff and policy disarray of a wayward White House.

.. Mr. Trump’s chief economic adviser, Gary D. Cohn, warned the chief of staff, John F. Kelly, that he might resign if the president went ahead with the plan,

.. Yet at the end of a photo session, when a reporter asked Mr. Trump about the measures, he confirmed that the United States would announce next week that it is imposing long-term tariffs of 25 percent on steel and 10 percent on aluminum. The White House has not even completed a legal review of the measures.

.. Mr. Cohn, who almost left last year after Mr. Trump’s response to a white nationalist march in Charlottesville, Va., indicated he was waiting to see whether Mr. Trump goes through with the tariffs

.. second day in a row that Mr. Trump blindsided Republicans and his own aides.

.. he embraced the stricter gun control measures backed by Democrats

.. Mr. Trump relied on a small circle of colleagues and a management style that amounted to “trial and error — the strongest survived, the weak died.”

.. erratic boss and little in the way of a coherent legislative agenda

.. they are consumed by infighting, fears of their legal exposure and an ambient sense that the White House is spinning out of control.

.. he carries on a bitter feud with his attorney general and watches members of his family clash with a chief of staff he recruited to restore a semblance of order — all against the darkening shadow of an investigation of his ties to Russia.
..Mr. Trump’s instinct during these moments is to return to the populist themes that carried him to the White House, which is why his trade announcement is hardly surprising.
.. Mr. Trump has few fixed views on any issue, but he has been consistent on his antipathy for free trade since the 1980s
.. Without Mr. Porter playing a stopgap role on trade, the debate has been marked by a lack of focus on policy and planning
.. Mr. Trump lashes out regularly at Attorney General Jeff Sessions with a vitriol that stuns members of his staff.
.. Mr. Trump regards Mr. Sessions’s decision to recuse himself from the Russia investigation as the “original sin,” which the president thinks has left him exposed.
.. Anthony Scaramucci, an ally of some in the Trump family, whom Mr. Kelly fired as communications director after only 11 days, intensified his criticism of the chief of staff in a series of news interviews on Wednesday and Thursday.

.. Mr. Trump is also frustrated with Mr. Kushner, whom he now views as a liability because of his legal entanglements, the investigations of the Kushner family’s real estate company and the publicity over having his security clearance downgraded

.. some aides have expressed frustration that Mr. Kushner and his wife, the president’s daughter Ivanka Trump, have remained at the White House, despite Mr. Trump at times saying they never should have come to the White House and should leave.

.. aides also noted that Mr. Trump has told the couple that they should keep serving in their roles, even as he has privately asked Mr. Kelly for his help in moving them out.

.. Some argue Mr. Kelly should have carried out a larger staff shake-up when he came in. That has allowed several people to stagnate, particularly in policy roles, one adviser said.

Trade Wars Are Destructive. Of Course Trump Wants One.

.. as with so many other policies he has supported, he appears to have little understanding of this one.

.. Many White House aides, including Mr. Trump’s chief economic adviser, Gary Cohn, appeared to be caught off guard by the decision; on Wednesday, Mr. Cohn had warned that he might resign if Mr. Trump went through with the tariff plan.

.. The stock market fell sharply after the announcement because investors feared that the move was the first of several that could result in escalating disputes

.. The steel and aluminum tariffs are ostensibly aimed at punishing China, which has been driving down prices for those commodities by producing far more metal than the world can use. But Mr. Trump’s move will have a limited effect on China because much of the steel and aluminum the United States imports actually comes from allies like Canada, Brazil, South Korea and Mexico.

.. the move could hurt American businesses that use these metals, including auto and construction companies

.. If Mr. Trump were truly interested in getting China to reduce its excess production, he would have worked with the European Union, Canada, Japan, South Korea and other countries to put pressure on Beijing. Those nations tend to be closely aligned with the United States and have also been hurt by China’s mercantilist economic policies.

.. threatening to retaliate forcefully against the new Trump tariffs. They could do so by bringing cases against the United States at the World Trade Organization, or by doing what Mr. Trump did and unilaterally imposing new tariffs on American exports like soybeans and Boeing planes.

.. Canada imports more American Steel than it exports to the United States, giving it the ability to hurt the very industry Mr. Trump claims to want to help.

.. Chrystia Freeland, says Canada buys about half of American steel exports.

.. for every new job at a steel mill or aluminum smelter that is created by this trade decision, the country could lose as many or more jobs at businesses that use those metals, which will now cost more. This is one of the reasons that trade wars are, in fact, not easy to win.

.. Mr. Trump clearly sees trade as a zero-sum game.

.. He and some of his most protectionist advisers, including Peter Navarro, think that if China and Mexico sell the United States more things than they import from America, they are winning.

 

Trump’s Tariffs Prompt Global Threats of Retaliation

The European Union detailed a three-step plan to penalize $3.5 billion of American trade — the same amount of European steel and aluminum the bloc estimates would be harmed by the planned tariffs. It proposed taxing American exports including bourbon, bluejeans, orange juice, cranberries, rice and motorcycles.

A European Union official said that the bloc had been preparing for the announcement for months and that everything was in place for a swift, proportionate response.

.. The measures were intended to put pressure on politically sensitive areas, trade analysts said. Harley-Davidson motorcycles are made in the home district of Speaker Paul D. Ryan, Republican of Wisconsin. Orange juice comes from the swing state of Florida. Restrictions on Kentucky bourbon could add pressure on the Senate majority leader, Mitch McConnell, who is from the state.

.. Retaliation could hit hardest in many of the rural communities that were strongholds for Mr. Trump. Farmers are among America’s largest exporters, and often become a target in trade spats

.. She said the agricultural community was “rightly nervous” about the prospect.

.. Canada and Mexico were America’s No. 1 and No. 3 largest agricultural markets in 2016, and South Korea is a major market for beef, corn, pork and fresh fruit

.. The United States exports cotton to Turkey and wheat and dairy to Brazil, other major suppliers of steel.

.. Peter Navarro, a top White House trade adviser, said he did not believe any country would retaliate, “for the simple reason that we are the most lucrative and biggest market in the world.”

“They know they’re cheating us, and all we’re doing is standing up for ourselves,” he added.

.. if the United States was willing to impose penalties like these on its close trading partners, other countries would be less eager to negotiate trade deals with the United States. “What is the benefit of having a special relationship?” he asked. “I think there could be a lot of unintended and unforeseen consequences.”